08 Oct 2008
Bloomberg -- Crude oil fell in New York, trading below $90 a barrel, as consumption weakens in the U.S. and other developed nations amid a worsening credit crisis that's restraining economic growth. Oil retreated after rising 2.6 percent yesterday, its first rally in a week. U.S. gasoline demand dropped 9.5 percent last week, according to MasterCard Inc., and falling consumption yesterday prompted the Energy Department to cut its oil price forecasts.
Global stock markets have plunged as banks freeze credit lines to investors and companies.``Demand destruction is prevalent in developed countries with consumption falling at about 3 to 4 percent,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``The credit crunch is forcing traders to de-leverage their positions as they have no access to credit.'' Crude oil for November delivery fell as much as $1.20, or 1.3 percent, to $88.86 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $88.88 a barrel at 12:51 p.m. in Singapore. Futures have declined 40 percent from the record $147.27 reached July 11. Yesterday, crude oil rose $2.25 to $90.06 a barrel in New York. The stock market decline has spurred concern that growth will slow and crimp demand for fuels.
The Standard & Poor's 500 Index slid 60.66 points, or 5.7 percent yesterday, to 996.23, extending its 2008 tumble to 32 percent in the market's worst yearly slump since 1937. The Dow Jones Industrial Average dropped 508.39, or 5.1 percent, to 9,447.11, giving it a 29 percent retreat in 2008, the worst in 71 years. Demand Slump Credit ``conditions are unlikely to improve significantly in the next few weeks or months, commodities prices may very well remain under pressure in the near future,'' Goldman Sachs Group Inc. commodity research analysts including Giovanni Serio and Jeffrey Currie said in a report yesterday. U.S. motorists bought an average 8.625 million barrels of gasoline a day in the week ended Oct. 3, down from 9.536 million a year earlier, MasterCard, the second-biggest credit-card company, said yesterday in its SpendingPulse report. It was the 24th consecutive weekly decline, and the biggest since September 2005, after Hurricane Katrina sent pump prices to records.
